RICHMOND — When improvements begin next month at two low-income housing developments here, the bulk of the work will be financed by private equity and not the federal government, a major shift in how public housing upgrades are funded.

For decades, housing authorities have grumbled that federal funds were insufficient to cover all maintenance costs of public housing developments, especially in cities such as Richmond where more people rely on subsidized housing. But in 2012, Congress signed off on the Rental Assistance Demonstration program, or RAD, a program of the U.S. Department of Housing and Urban Development that allows housing authorities to sell tax credits to private investors in exchange for cash. The equity, together with state and local funds, is then used to carry out repairs on properties and build new affordable housing.

The idea is that developments are untapped real estate assets that can be leveraged to finance improvements instead of waiting for the federal government to provide enough cash. The current backlog of public housing capital needs around the country is estimated at $26 billion, according to one study, with the price tag going up $3.4 billion each year.

“We were never going to get enough money to address all the capital needs that we have,” said Tim Jones, the executive director of the Richmond Housing Authority, which manages six public housing sites in the city. “I know that people don’t like change a lot, but we need to give these projects a chance. Under this program, we can renovate a unit, allow a neighborhood it’s located in to appreciate in value, and make sure it’s not going to fall into disrepair for the next 30 years because we’ve funded that, too.”

RAD centers on tax credits that the Richmond Housing Authority will sell to investors in exchange for a reduction in their tax liability. In lieu of fewer taxes, investors will give money to the housing authority to redevelop sites.

Richmond was an early adopter of the program, applying the same year it was approved. Today, nearly 400 housing authorities participate in RAD. That includes the Housing Authority of Contra Costa, which will use the program to develop or rehabilitate 90 vacant units at the crumbling Las Deltas development in North Richmond.

So far, low-income housing developments in North Richmond and Richmond are the only ones in Contra Costa County that have been approved for the program.

In Richmond, the first public housing sites to be renovated under RAD will be a 58-unit senior development called Friendship Manor and a 98-unit family development called Triangle Court. Improvements to both sites are estimated to total $34 million, which would be impossible given that the agency receives just $850,000 a year for maintenance and repairs, according to Jones.

The work includes repainting the exterior of buildings, new insulation for the roof, new doors, windows and more water- and energy-efficient appliances. To avoid having to relocate hundreds of residents at once, only residents living in as many units as can be refurbished in one month will be moved.

Another two sites — Nevin Plaza, a 142-unit development for seniors and the disabled, and Nystrom Village, a 102-unit family development — have also recently received RAD funding and are scheduled to begin improvements in 2017.

Some critics have described the new effort as the “inching closer to privatizing public housing” and have raised concerns about the lack of transparency if the day-to-day operations of low-income housing are contracted out to private companies.

“Public housing is a public creature: They have a board, they have meetings, and residents who are involved and engaged through an advisory board,” said Stephen Knight, an attorney with the National Housing Law Project, a housing and legal advocacy group based in San Francisco.

“Some of the structures allowed under RAD may not include that same level of transparency about who owns what and what decisions are made … . Turning to the private market is not a fix for our public housing problems.”

Under RAD, the Richmond Housing Authority will provide qualifying residents at its housing developments with Section 8 vouchers, giving them a choice to remain in their renovated units or move to private sector housing, if they can find it. To remain eligible, tenants would have to earn less than $37,200 for a family of two, or 50 percent of the area median income, ensuring that the units are reserved for the neediest residents.

Meanwhile, the day-to-day affairs of the apartment complex will be managed by a private management company, and a nonprofit arm of the Richmond Housing Authority, the RHA Housing Corp., will continue to own the land and the building.

That’s different from many other housing authorities, which will turn over ownership of their low-income housing to nonprofit operators.

The distinction is important because it will help ensure that all units in the building remain low-income instead of becoming market rate if the operator goes out of business or the property falls into foreclosure, Jones said.

“We wanted to self-develop because we wanted local control,” Jones said, adding that he and his staff would sit on the board of the nonprofit created to manage the sites. “If the housing authority is in the ownership structure, then it has a vested interest in its own ongoing provision of affordability.”

Local tenants rights advocates say the devil is in the details when it comes to how the new program is implemented and whether it preserves low-income housing for years to come. In Richmond and across the country, the amount of low-income housing has declined over the years, while renovation and new public housing has not kept pace with demand.

“Historically, there have been problems with promises made but not always kept,” said David Levin, a housing rights attorney at Bay Area Legal Aid. “We’re cautiously optimistic, but the key will be the follow-through.”